3 Top Tech Stocks to Buy Right Now

Some tech stocks are soaring too close to the sun these days. The marketwide artificial intelligence (AI) frenzy can have that effect. However, the rising tide isn't lifting every boat. A few high-quality tech tickers were left behind, leaving their buying windows wide open.

On that note, let's take a close look at three great tech stocks that have seen negative price trends in recent months. Here's why you should keep an eye on cloud computing specialist DigitalOcean (DOCN 3.30%), digital advertising expert PubMatic (PUBM 1.75%), and voice-based AI veteran SoundHound AI (SOUN 5.77%).

DigitalOcean

As a provider of low-cost cloud computing services with a user-friendly interface, DigitalOcean mainly caters to small and medium-sized businesses (SMB). Conventional wisdom suggests that SMB businesses are more sensitive to economic swings than enterprise-class giants.

Many investors have jumped to the conclusion that companies like DigitalOcean must suffer terrible business trends in this challenging market. Modest guidance for the ongoing third quarter seemed to confirm the bearish fears. As a result, DigitalOcean's shares have taken a 39% haircut in the last three months.

But it's always darkest right before dawn. The economy won't stay on the ropes forever, and recent reports have shown signs of improvement. And when America roars back into action, the SMB sector should lead the way again. If you're sensitive to downturns, you're also likely to recover quickly when the coin flips back to the sunny side.

And the business is still robust, even in this dark period. Full-year revenue is expected to rise by more than 18% -- down from 34% in 2022 but still a healthy increase. Taxable operating profits are negative, but DigitalOcean expects solid cash profits with free cash flows clocking in at roughly 21% of revenue.

So there's light at the end of the tunnel, and the underpass was never dark enough to scare me. DigitalOcean is poised for a dramatic rebound, whenever the broader economy finds its sea legs again.

PubMatic

The digital advertising sector is another amplified corner of the overall economy. When businesses and consumers are holding on to their wallets with an iron grip, it doesn't make much sense to embark on a massive marketing campaign. Better to save that push until people are willing to buy what you're selling, right?

So PubMatic operates in a particularly constrained sector right now. Just like DigitalOcean, this temporary pressure sets the company up for a major resurgence later on. In this case, two years of limited advertising budgets have created a huge imbalance. Over here, you see continued development of new products and services, yearning for an effective marketing push. And over there, the tight ad budgets force the marketing team to kick that can further down the road.

So there is an impressive backlog of delayed ad campaigns. And when the market is ripe for fresh ad messages again, there should be a temporary but glorious spike in PubMatic's revenue and profits. Enormous demand for a limited amount of ad space can drive spot prices through the roof.

That's not a sustainable long-term benefit, of course. The ad market will probably overheat briefly and then cool down to the balanced supply-and-demand situation from the pre-COVID era. At any rate, PubMatic's stock is down 35% in three months and 85% from the all-time highs of late 2021. These shares have been priced for absolute disaster, and a mere return to normalcy would likely put plenty of money in its shareholders' pockets.

SoundHound

Voice recognition specialist SoundHound AI should be skyrocketing in 2023. This company has AI in its name, and that connection alone has sent many tech stocks skyward this year.

This company was doing AI and machine learning long before it was cool. Founded in 2005, SoundHound has identified billions of songs and gained several high-profile voice control deals in the auto industry.

Yet, the AI boom left SoundHound behind. AI poster child Nvidia (NVDA 6.18%) stock has nearly tripled in 2023, but SoundHound is down by 8% instead.

SoundHound scares some investors away due to its shaky financial results. The company is old, but still quite small and saddled with the increased uncertainty of microcap stocks. Sales are growing fast, but the bottom-line figures are printed in dark shades of red.

But this is a classic growth stock. SoundHound's profits are negative because the company is making heavy investments in research and development of future growth-driving products and services. It could produce positive net income at the drop of a hat, but at the cost of sacrificing this important business-booster. So SoundHound spends its initial public offering (IPO) money now in order to make more money later.

And like I said, SoundHound is all about artificial intelligence. Its expertise in this red-hot sector could make it a low-cost buyout target if share prices stay low. Or, the company could keep going its own way to pursue voice-controlled disruption across many different industries.

So SoundHound's cash-bleeding operations add risk in the short term, but I see several different paths to long-term gains here. In the meantime, the stock trades at the modest valuation of 1.7 times trailing sales. If you can accept a rocky road full of potholes until earnings and cash flows have stabilized, SoundHound looks more promising than risky.